Cautiousness prevails

North Asian markets aside, regional indices saw prices slowing to a crawl on Tuesday, but Wednesday is likely to bring along data feeds from the region that could give the market more leads to work with.

With President Donald Trump bringing the focus to immigration policies once again, the market has reverted to a cautious stance this week. Tuesday also saw President Donald Trump targeting drug companies over twitter, touching on drug pricing, sending the healthcare sector to close as one of the three worst performing sectors on the S&P 500. Talks of fiscal and tax policies have evidently been placed on the back burner.

Notably, the energy sector recorded a significant dip of 0.9% as crude oil prices retreated. Certainly adding to the downward pressure for prices had been the 11.6 million barrel build up in crude inventories according to the American Petroleum Institute (API).

This pre-empts a substantial overshoot of the 2 million barrel consensus for the official Energy Information Administration (API) report in the day. However, reassuring the market had been Saudi Arabia’s energy minister, helping to keep prices from falling past last week’s lows.

These days it is all about the Fed. The market is almost certain that the FOMC will move rates in the upcoming meeting with Bloomberg’s calculation of the probability peaking at 96.0% as of Tuesday. What does not appear as certain is what could be in store for the markets after this turn of the corner. The delay in the introduction of President Donald Trump's pro-growth policies still has the market torn on how many Fed hikes we may see this year and into 2018.

Asian markets look set for a softer start according to our opening calls. Early movers in the region was seen trading relatively flat with the Nikkei 225 the exception, down 0.3% when last checked at 9.00am (Singapore time). Despite the upward revision, Japan’s final Q4 growth figures had missed the market expectation coming in with a headline number of 0.3% quarter-on-quarter (QoQ). USD/JPY had meanwhile held relatively steady trading just below $114.00 after the data.

For the day ahead, the focus for Asian markets will likely be on China’s trade balance. Exports growth is expected to accelerate and could provide a boost of optimism for the regional markets. Keep a close look for US EIA report in addition to the ADP employment report for February during US hours.

Yesterday: S&P 500 -0.29%; DJIA -0.14%; DAX +0.06%; FTSE -0.15%

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